"Hollow Mexico"

[Carl Remick]

[From the current NY Press.]

Hollow Mexico

By George Szamuely

The inane euphoria at Vicente Fox’s electoral triumph in Mexico was entirely 
to be expected. Every few years we are regaled with stories of Mexico’s 
dynamic "new" leaders. They are invariably pro-business, pro-democracy, 
pro-markets, pro-free trade and pro-American. They are committed to 
political reform and to cracking down on corruption and drug trafficking. 
The now-reviled former President Carlos Salinas was once the toast of 
Washington: Bill Clinton’s candidate to head the World Trade Organization, 
and on the board of directors of Dow Jones. His stealing of the 1988 
elections was never held against him.

After the euphoria comes the letdown. There is always a financial crisis and 
the United States has to step in with a massive loan to buy off social 
discontent and keep Mexico’s rulers in power. Before long, Washington will 
find a new team of leaders to contrast favorably with the old. For Mexico is 
not a state in any meaningful sense at all. It is a U.S. colony. The purpose 
of any Mexican government is to ensure that the U.S. has access to a steady 
supply of cheap labor.

In Vicente Fox, our elites appear to have found their ideal candidate. Not 
only is he a former Coca-Cola executive, he even wants to expand Mexican 
immigration into the U.S. "We have this huge difference in salaries between 
the Mexican side and U.S. side. A worker on the Mexican side will make five 
dollars a day; in the States, the same work would make $60 a day… So our 
proposal is to move to a second phase of NAFTA where in five to ten years 
that border will be open to free flow of people…" Fox is not suggesting that 
Mexican wages should become more like U.S. wages. If they were he could not 
hope to attract any investment. What he means is that U.S. wages should 
become more like Mexican wages. Open borders will ensure just that. The 
corporations purr at the prospect of a North American Common Market.

Vicente Fox has another proposal that our elites will find pleasing. He 
intends to stop even pretending to be waging war against the drug lords. 
Washington knows very well that almost every Mexican politician and 
bureaucrat earns money from drugs. Hard currency revenues from drug 
trafficking have become essential to keeping the Mexican economy afloat. 
Therefore, any crackdown on the narcotics cartels would have serious 
economic and political repercussions. Happily, Fox has found a solution to 
the dilemma. "We must put together countries that produce drugs, countries 
that traffic and countries that consume, and through this multilateral 
effort really stop the growing of crime," he argues. In other words, set up 
a blue-ribbon commission, let it ponder away for years and then ignore 
whatever it recommends.

The Mexican state has never been about the creation of a free market or the 
promotion of economic growth. It was designed to raise dollars for Mexico’s 
ruling elites. And the U.S. was always on hand to make sure its interests 
were secure. In August 1982, Mexico devalued its currency and defaulted on 
an $80 billion debt. The Reagan administration immediately extended $2 
billion to refloat Mexico’s economy. In July 1988, when Cuauhtemoc Cardenas 
Solorzano, who had vowed to repudiate Mexico’s foreign debts, appeared to be 
heading for victory in the presidential elections, the U.S. jumped in with a 
$1 billion bridge loan. Thanks to that, plus a good deal of electoral fraud, 
PRI rule survived.

January 1994 saw the implementation of NAFTA -- yet another 
Washington-inspired scheme to keep Mexico’s elite in power. Mexico received 
$50 billion in new portfolio investment and tens of billions more in private 
loans. By December things had gone sour. Encouraged by Washington, Mexico 
had, since the 1980s, been liberalizing, privatizing and deregulating. As a 
result, the country had become dependent on capital inflows to finance a 
growing trade deficit. When investors jumped ship, Mexico was unable to 
support the overvalued peso.

Enter Bill Clinton and Robert Rubin. They extended a $20 billion loan to 
save their banker friends and clients in Mexico. But the peso collapsed. 
Interest rates soared. And Mexico experienced a terrible depression. Banks 
had to be bailed out -- to the tune of $100 billion -- courtesy of Mexico’s 
taxpayers. Clinton and Rubin boasted that Mexico had paid back every dime of 
the loan. What they failed to mention was that the Mexican government could 
only do that by borrowing heavily in the international private markets at 
rates 5 percent above normal, thereby burdening Mexico’s poor with yet more 
obligations.

As businesses declared bankruptcy and wages fell, and millions lost their 
jobs, Mexicans streamed north across the border. Mexicans in the U.S. -- 
legal and illegal -- are believed to send back something like $5.5 billion a 
year -- a substantial sum for a country short of foreign exchange. This 
really is a redistribution of wealth from the poor to the rich, sponsored by 
the U.S. government.

Fox’s continental common market is sure to become a mechanism for 
Washington’s continuing underwriting of Mexico’s ruling elite. Transfer of 
resources from the U.S. to Mexico will be labeled "regional development 
aid." In the meantime the flow of Mexican immigrants to the U.S. will 
continue unabated.

[end]

Carl

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